On the shortcomings of cause-effect based models in management
Business schools perpetuate the myth that the outcomes of changes in organizations can be managed using models that are rooted in the scientific-rational mode of enquiry. In essence, such models assume that all important variables that affect an outcome (i.e. causes) are known and that the relationship between these variables and the outcomes (i.e. effects) can be represented accurately by simple models. This is the nature of explanation in the hard sciences such as physics and is pretty much the official line adopted by mainstream management research and teaching – a point I have explored at length in an earlier post.
Now it is far from obvious that a mode of explanation that works for physics will also work for management. In fact, there is enough empirical evidence that most cause-effect based management models do not work in the real world. Many front-line employees and middle managers need no proof because they have likely lived through failures of such models in their organisations- for example, when the unintended consequences of organisational change swamp its intended (or predicted) effects.
In this post I look at the missing element in management models – human intentions - drawing on this paper by Sumantra Ghoshal which explores three different modes of explanation that were elaborated by Jon Elster in this book. My aim in doing this is to highlight the key reason why so many management initiatives fail.
Types of explanations
According to Elster, the nature of what we can reasonably expect from an explanation differs in the natural and social sciences. Furthermore, within the natural sciences, what constitutes an explanation differs in the physical and biological sciences.
Let’s begin with the difference between physics and biology first.
The dominant mode of explanation in physics (and other sciences that deal with inanimate matter) is causal – i.e. it deals with causes and effects as I have described in the introduction. For example, the phenomenon of gravity is explained as being caused by the presence of matter, the precise relationship being expressed via Newton’s Law of Gravitation (or even more accurately, via Einstein’s General Theory of Relativity). Gravity is “explained” by these models because they tell us that it is caused by the presence of matter. More important, if we know the specific configuration of matter in a particular problem, we can accurately predict the effects of gravity – our success in sending unmanned spacecraft to Saturn or Mars depends rather crucially on this.
In biology, the nature of explanation is somewhat different. When studying living creatures we don’t look for causes and effects. Instead we look for explanations based on function. For example, zoologists do not need to ask how amphibians came to have webbed feet; it is enough for them to know that webbed feet are an adaptation that affords amphibians a survival advantage. They need look no further than this explanation because it is consistent with the Theory of Evolution – that changes in organisms occur by chance, and those that survive do so because they offer the organism a survival advantage. There is no need to look for a deeper explanation in terms of cause and effect.
In social sciences the situation is very different indeed. The basic unit of explanation in the social sciences is the individual. But an individual is different from an inanimate object or even a non-human organism that reacts to specific stimuli in predictable ways. The key difference is that human actions are guided by intentions, and any explanation of social phenomena ought to start from these intentions.
For completeness I should mention that functional and causal explanations are sometimes possible within the social sciences and management. Typically functional explanations are possible in tightly controlled environments. For example, the behaviour and actions of people working within large bureaucracies or assembly lines can be understood on the basis of function. Causal explanations are even rarer, because they are possible only when focusing on the collective behaviour of large, diverse populations in which the effects of individual intentions are swamped by group diversity. In such special cases, people can indeed be treated as molecules or atoms.
Implications for management
There a couple of interesting implications of restoring intentionality to its rightful place in management studies.
Firstly, as Ghoshal states in his paper:
Management theories at present are overwhelmingly causal or functional in their modes of explanation. Ethics or morality, however, are mental phenomena. As a result they have had to be excluded from our theories and from the practices that such theories have shaped. In other words, a precondition for making business studies a science as well as a consequence of the resulting belief in determinism has been the explicit denial of any role of moral or ethical considerations in the practice of management
Present day management studies exclude considerations of morals and ethics, except, possibly, as a separate course that has little relation to the other subjects that form a part of the typical business school curriculum. Recognising the role of intentionality restores ethical and moral considerations where they belong – on the centre-stage of management theory and practice.
Secondly, recognizing the role of intentions in determining peoples’ actions helps us see that organizational changes that “start from where people are” have a much better chance of succeeding than those that are initiated top-down with little or no consultation with rank and file employees. Unfortunately the large majority of organizational change initiatives still start from the wrong place – the top.
Most management practices that are taught in business schools and practiced by the countless graduates of these programs are rooted in the belief that certain actions (causes) will lead to specific, desired outcomes (effects). In this article I have discussed how explanations based on cause-effect models, though good for understanding the behaviour of molecules and possibly even mice, are misleading in the world of humans. To achieve sustainable and enduring outcomes in organisation one has to start from where people are, and to do that one has to begin by taking their opinions and aspirations seriously.