Litton Industries became the first conglomerate to preach the gospel of management controls. Lacking either the experience or training to evaluate the performance of so many different businesses, Tex [Thornton] increasingly relied on financial data, reports from the field, and organized information. Each division put together a detailed financial plan each year. Then its managers would fly to Litton headquarters in Los Angeles to defend it in front of a chain-smoking, Coca-Cola-sipping Thornton. Every plan included projections for twelve months on a monthly basis, for twenty-four months on a quarterly basis and for thirty-six months on an annual basis.
… The downside, though less clear in these early enthusiastic days when generations of managers embraced the management controls touted by Thornton and McNamara, was real and dangerous. At Litton and other conglomerates, in the words of business professor Henry Mintzberg, management “remained distant from the subject of its efforts, acting as if it moved pieces on a chessboard, making little effort to influence what those pieces really do, even how they relate to each other in any but the most superficial ways. It did not involve getting deeply inside a business, coming to know its needs and its processes and its people well enough to weld them all together in a smoothly functioning entity that serves its markets with care and understanding.”
That was from John Byrne’s “The Whiz Kids: Ten Founding Fathers of American Business — and the Legacy they Left Us.” Of course, Robert McNamara brought these management controls into the Pentagon, and there they have remained ever since. The imperative to rid the Pentagon of these ill-founded concepts has never been higher. Here’s more from Byrne:
McNamara was doing at the Pentagon what Thornton was doing at Litton and what Arjay Miller and Ed Lundy were still doing at Ford. At each institution, the numbers they pored over were different but they accomplished the same thing. They made Ford’s cars, Litton’s potentometers and the Department of Defense’s massive resources more management abstractions to professionals who didn’t or couldn’t have firsthand experience with a car, an electronic device or troops and missiles. The numbers were complex, yet subtle; illuminating, but often deceptive; suggesting and always powerful.
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