Why Theory?
A
theory
is simply a conceptual framework for organizing knowledge and
providing a blueprint for action.
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Although some theories seem abstract and irrelevant,
others appear very simple and practical. Management theories, which are used to build orga-
nizations and guide them toward their goals, are grounded in reality.
16
Practically any orga-
nization that uses assembly lines (such as Nissan and Samsung) is drawing on what we
describe later in this chapter as scientific management. Many organizations, including
Nucor Steel and Google, use the behavioral perspective (also introduced later in this chapter)
to improve employee satisfaction and motivation. And naming a large company that does
not use one or more techniques from the quantitative management perspective would be
difficult. For example, retailers such as Best Buy and Target routinely use operations man-
agement to determine how many checkout lines they need to have open at any given time.
In addition, most managers develop and refine their own theories of how they should run
their organizations and manage the behavior of their employees. James Sinegal, founder and
CEO of Costco Wholesale, believes that paying his employees well while keeping prices as
low as possible are the key ingredients in success for his business. This belief is based essen-
tially on his personal theory of competition in the warehouse retailing industry.
Why History?
Awareness and understanding of important historical developments
are also important to contemporary managers.
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Understanding the historical context of
management provides a sense of heritage and can help managers avoid the mistakes of
others. Most courses in U.S. history devote time to business and economic developments
in this country, including the Industrial Revolution, the early labor movement, and the
Great Depression, and to captains of U.S. industry such as Cornelius Vanderbilt (rail-
roads), John D. Rockefeller (oil), and Andrew Carnegie (steel). The contributions of
those and other industrialists left a profound imprint on contemporary culture.
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Many managers are also realizing that they can benefit from a greater understanding
of history in general. For example, Ian M. Ross of AT&T’s Bell Laboratories cites The
Second World War by Winston Churchill as a major influence on his approach to lead-
ership. Other books often mentioned by managers for their relevance to today’s business
problems include such classics as Plato’s Republic, Homer’s Iliad, Sun Tzu’s The Art of
War, and Machiavelli’s The Prince.
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And new business history books have also been
directed at women managers and the lessons they can learn from the past.
20
Managers at Wells Fargo clearly recognize the value of history. For example, the com-
pany maintains an extensive archival library of its old banking documents and records,
and even employs a full-time corporate historian. As part of their orientation and train-
ing, new managers at Wells Fargo take courses to become acquainted with the bank’s
history.
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Similarly, Shell Oil, Levi Strauss, Walmart, Lloyd’s of London, Disney, Honda,
and Unilever all maintain significant archives about their pasts and frequently evoke
images from those pasts in their orientation and training programs, advertising cam-
paigns, and other public relations activities.
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