Complex critic: US approach too simple

Editor's Note: Fredmund Malik, a leading management expert in Europe, is known for his often-severe criticism of Anglo-Saxon management practices. "They think in numbers and only believe in money," the professor once said about executives trained in the American way of management. Malik said the complex world, more evident in the era of globalization, needs the "complexity management" theory he practices. He said China, with its population, long and turbulent history and ethnic diversity, is where complexity management might be most needed to tackle the problems it faces.

The professor recently talked to China Business Weekly reporter Zheng Lifei on subjects ranging from the role of management in the current financial crisis to his observations on management education in China.

Q: You predicted the current financial crisis. Does the crisis have anything to do with management?

A: The crisis is the failure of the American system of management. The American way of doing business may be right for the United States and its own conditions, which are very simple compared to Europe and China. For example, the US is unified by one language, while in Europe we have 25 or even more languages, and nobody can do business without mastering at least two or three languages. We had until a few years ago 25 different currencies on the continent. So it does not have the complexity that Europe or China faces.

American management is the best in the world if its task is to deal with simple conditions. But as soon as the condition becomes complex, it just breaks down and nothing shows this better than the current crisis because it has its origin in the US, in its financial system and in the way the US manages.

There is a misleading belief among American executives that they should just look at shareholder value, care about sheer financial figures and measure everything in terms of money. This is like looking at the present but losing the future.

Of course there are some well-run American companies, but there not many, otherwise the economy would not have collapsed like this. Basically, American management in the last 15 years is like driving a car by looking in the rear mirror.

Q: But then why are American management or business administration practices and theories so popular in the world, including in China?

A: First, it has something to do with language. When China opened up, these programs (on American management theories) were available in English due to their language availability. This is not the case for others like my German books.

The second point is that there is a great misunderstanding with regard to the US economy. Most people think the US economy is strong because they are deceived by its sheer size. The US economy is large and therefore it has very large business organizations. The big size is not due to good management, but to the large market, which has 300 million customers.

But in Europe we have always had the necessity to go beyond our own countries and confront different conditions such as languages, cultures and currencies to grow our business.

The US is a large economy and it has large companies, but it is a weak economy with weak companies, as shown by the current crisis. This is beyond doubt.

European companies were also hurt too as no one could evade the financial crisis that originated in the US.

The severe crisis shows that the best way is not just to react to the crisis, but get prepared and prevent it from happening in the first place. It is like training a pilot. We have the pilot get prepared to deal with any possible situation and disaster in simulation and prevent that from occurring in reality.

I think the current global financial crisis will change the perception of American management and my complexity management theory will be an alternative.

Q: What's your observation of China's management education?

A: First of all, what strikes me most is how important and how serious Chinese executives, officials and parents alike are when they think of education.

In terms of management, there are two schools of thinking currently in China. One group has been educated in the US. Among them there are some strict believers in the US management system, thinking it is the best in the world and nothing else exists. There is also another group that was also educated in the US but is sort of skeptical about the management education they received. They are very important people as they know what could be learned and what could not and what is suitable for the country and what is not. And there are those who are Chinese-educated. They also are sort of skeptical about US management because they have not studied it. But they are very much aware of the complexity of China through their work and they know some approaches of US management do not fit the country. And the current crisis shows that the US one is not the way.

When I was in China back in 1999 lecturing Chinese executives, it was sort of difficult to even to make them think alternative ways of management thinking. Then in the last few years, they changed. It shows how badly China needs management education to cope with its own problems.

It is important for the county to know as much as possible the importance of management education. And I believe that one day there will be a management theory that is not imported from outside but instead grows within China itself. And my thinking and Chinese thinking on the matter are very similar.

Q: Could you elaborate on that?

A: During many China visits and my earlier studies of the country, I have found how complex China it is due to its huge population, its long history, its ethnic groups, etc.

In Chinese philosophy, I also found many interesting ideas that are quite similar to those contained in my complexity management theory. For example, my viable system model is similar to the Chinese idea of sustainable and balanced development. And the harmonious approach in my management practice is also valued very much in Chinese philosophy. And more interesting is that I found what I have learned from the ideas and writings from General Sun Tze (author of The Art of War) can be directly applied to management practices in the 21st century.

And due to its complex conditions, China is where the complexity theory will find its place and it is probably the best way for the country.

(China Daily 06/15/2009 page2)