Book Review: Irrational Institutions by Bob Emiliani

“A bad system will beat a good person every time”—W.E. Deming

The best thing about Emiliani’s latest book is that it challenges you to think in uncomfortable ways.  Sure, most business books make you think a little, but often they simply validate your own point of view by articulating it in language better than your own.  We all do it.  We seek out, through books and other media we consume, eloquent confirmation of our pre-existing opinions and mental models.  Irrational Institutions is not such a book—it will challenge all your beloved mental models about business, leadership and the earnest attempts to make it better.

While it stands on its own, Irrational Institutions is a follow up book to Emiliani’s lengthier The Triumph of Classical Management Over Lean Management (Cubic LLC, 2018).  The Triumph book (TCM) examines with academic rigor and incisive analysis how the institutions of leadership and business are formidable sociological forces that have shaped leadership behavior—and continue to do so– for over 100 years.  The normative social expectations put upon business leaders to exhibit power, dominance and authority, and to pursue both personal and shareholder wealth at the expense of employees, suppliers, customers, and even society, creates the “bad system” of management that Deming so famously refers to.  It’s a far stronger system than we’d like to admit.  Thus the institutions of leadership cause good people to do bad things as leaders– if not entirely reckless or criminal things, as in the more egregious cases, then at the least selfish, disrespectful and unethical things.

Alternative (and objectively better) philosophies of leadership and business, Emiliani argues, have had only marginal success.  Starting with Frederick Winslow Taylor during the Progressive Era (1890s -1920s), through the rise of Toyota’s famous production system and the Deming-inspired Total Quality Management in the second half of the 20th century, and culminating in the Lean movement from the late 1980’s to the present, many engineers, consultants, academics, and business leaders have tried to promote a more humanistic approach to management.  These approaches all share a common foundation of respecting all people (workers especially), creating value for customers, and applying scientific thinking (testing hypotheses with facts and data) to continuously improve, learn and grow.  In both TCM and Irrational, Emiliani explores the question of why so few companies, large or small, have been able to put these superior management philosophies into practice.

His answer lies in the institutional inertia of what Emiliani calls Classical Management, the more familiar practice that (generally speaking) privileges executives over workers, relies on intuition and “gut instincts” over facts and data, and is driven mainly by the single-minded desire to create short-term wealth for shareholders. 

Classical Management, it turns out, is incredibly resilient in preserving the status quo.  Irrational Institutions reminds us of just how deeply engrained the habits and manners of leadership and business really are, making them exceptionally hard to change.  Emiliani then considers these institutions of leadership and business through the remarkably original lens of aesthetics: the governing set of ideas about current style, taste, and beauty.  He illustrates how certain behaviors, modes of thinking, and visual representations of data and information are considered either “beautiful” or “ugly” in the eyes of the executive class.  That which is deemed “ugly” is not ugly because of any objective (aka scientific) standard of beauty, but is entirely subjective, a construction of the current executive opinions.  Executives like to use their privilege to be surrounded by things of beauty: upward sloping KPIs, an entourage of advisors who offer only solutions and flattery, pyramidal org charts, and the clean, flawless execution of tasks by way of technological automation.

Irrational Institutions ends by taking a critical look at the Lean movement, which has become—more often than not– a superficial management fad supporting the status quo rather than the radically different business philosophy found at exceptional companies like Toyota.  Lean has become a business like any other, Emiliani argues, and so it largely follows the same rules of Classical Management that most business does: self-centered judgements of beauty and ugliness that support “looking good” (maintaining one’s honor, credibility, reputation, etc. in the eyes of one’s peers) over rational, logical thinking and critical self-appraisal.  This chapter is not going to win Emiliani any friends in the Lean community (in which he is already considered a black sheep).  For the many people who make their living from Lean, myself included, this chapter can really sting.  It has you questioning how realistic it is to think that you can have any meaningful impact against the immutable forces of Classical Management.

But a good slap of reality is good for all of us from time to time.  Your visceral reaction might be to scream “he can’t be right about this!”, but the work is so well researched, and articulated so cogently, that it forces you to really think hard about the ideas put forth.  In the end, you might muster good counterarguments or might concede to his point of view.  It does not matter so much if you’re “right” or not.  It is the deep thinking and self-reflection that the book provokes that makes it well worth reading.

Because of its ability to induce fresh thinking, Irrational Institutions, if not the lengthier TCM, ought to be assigned reading for all business students.   It would make a welcome counterpoint to the more common b-school narratives, told with the full bias of hindsight, of superheroic CEOs who take risks against all the odds to capture huge swathes of market-share with magically innovative products.

Emiliani, primarily an academic researcher and professor, used to be a manager and Lean practitioner within industry.  Perhaps not surprisingly, then, Irrational Institutions blends the practical accessibility of business writing with the discipline of scholarly research.  Add to that delightful combination a mash-up of disparate fields such as aesthetics and management theory and you get highly original viewpoints on the causes of inveterate business problems.  Even if you disagree with some of the arguments put forth, you’ll be smarter for having read and engaged with them.

Irrational Institutions by Bob Emiliani, Ph.D. (South Kingstown, RI: Cubic LLC, 2020)

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