Additional notes on the 'Mythical Management Team' book chapter

Another problem with the idea of a management team is that they will determine rank order priority for activities within the organisation. This is actually perfectly reasonable behaviour and not necessarily harmful to the organisation. After all, some projects or business units will necessarily require priority at some point in their lifetime.

The problem is that the management team operates in terms of allocating ‘the best’ resources. They simply don’t have the time or inclination to focus on any others. That is because conflict in resource allocation will tend to be over the best resources. The management team is unlikely to be able to make as accurate decisions around fitness of resources – that is fitness to purpose.

So the management team, by placing projects or business units in ordinal priority will tend to move the best resources from assignment to assignment with little regard to finding the best fit for resources. One outcome of this are that the best resources tend to develop behaviours that match their transient work life (including ignoring important feedback loops). There is a second more damaging outcome.

The second result of an organisation which focuses on allocation of the best resources – which is the natural result of a ‘cohesive management team’ – is that resource allocation will tend to be at the expense of other projects or business units.

You might say that this is always the case. I start this book with the observation that doing one thing is necessarily not doing another. This is the opportunity cost lesson from economics. However, economics also teaches us about comparative advantage.

So resources should be put to use in the work that they are comparatively more effective than other resources. Applying ‘the best’ to each situation is like assuming that the man on the island (in the above description of comparative advantage) doesn’t have an incentive to work with the second man. In reality the organisation will perform better if the concept of the best resources is replaced with the concept of ‘the best fit’.

As an aside, the focus on the best resources is actually the result of personal risk management behaviours which are developed by the management team. By focusing on the best resources there is a change that the most appropriate work allocation wont occur. It is also likely (as I’m trying to prove) that the organisation will suffer. However, the risk that an individual manager might make an allocation which is seriously flawed is actually much lower. After all, the best resources should be able to perform better than average in most situations within a particular industry.

The problem is a management team cannot make these types of decisions day-to-day. But if they are forced to work as a team what else should they do. In fact, if you are trying to be a team player and you are in a management team you need to be willing to share your resources. Even if you know the that the best fit is for a resource to stay with you it doesn’t matter. You must be seen to give up your best resources for the higher priority problem. This is another case where management fads such as ‘teamwork’ work for everybody except groups of managers.

Priorities change. This is true because of legitimate changes in the competitive environment. But I have a feeling that there is another force at work. Priorities change because as inappropriate resource allocation continue other projects / business units are put at risk...