For those of you who follow my blog, you by now know that I don’t think much of management advice books.

These sorts of texts—and their flaws—have been the subject of previous tirades (“Why you can throw out that management advice book – Parts 1,2&3”). They also continue to provide fodder for an ongoing series of posts I call the “Paradox of the Week.”

What you may not be aware of, however, is that when I do take aim at a particular text, I make an effort to contact its author(s) whenever possible.[1] Typically what I do is shoot them an email that reads something like this:

Dear ______

As a professional courtesy, I am writing to let you know that I cited your work ______ in a recent blog post. If you feel that I have misquoted or misrepresented that text in any way, please do not hesitate to contact me.

Best, Etc., etc.

For the most part, the exchanges that have resulted have been civil. (Most of the time though, I simply never hear back.) That is, with one notable exception:

Professor Roger Martin.

His reply begins as follows:

Dear Mr. Rys: My advice would be for you to stick to pharmaceutical science where you might know something useful…

It kind of goes south from there.

So this week, an “open letter” to Professor Martin. In it, I’ll attempt to address his concerns, criticisms, accusations, and insults – and in so doing, clear up any questions you might have of your own.

 

Playing to win

 

What seems to have rankled Prof. Martin was my juxtaposition of a couple of passages from a book he co-wrote with the former CEO of Procter&Gamble A.G. Lafley titled, Playing to Win (2013).

Here’s what I had to say back in February:[2]

In Playing To Win…Lafley writes that during his tenure, P&G’s corporate statement of purpose included producing “products of superior quality and value [my emphasis]” for its customers (p. 19). And yet several pages earlier Lafley describes pricing a skin care product at $18.99 instead of $12.99 because market research showed that “prestige customers would doubt its efficacy” if it were priced “too low” (p. 12-14). Savvy marketing certainly, but hardly consistent with a commitment to providing customers with products of “value.”

And pointing out the apparent contradiction here seems to have, well…gotten under Prof. Martin’s skin.

First, a little about Roger Martin himself. Until recently, he was the Dean of the Rotman School of Management at the University of Toronto. He is now the Institute Director of the Martin Prosperity Institute, and according to his website, Martin is a “thinker, author, advisor, speaker” as well. And a business concept known as “integrative thinking” has been attributed to his work and research.[3]

Martin has also received a bunch of awards. Here’s just a few:

  • In 2013, he was named “Global Dean of the Year” by the business school website “Poets and Quants
  • That same year, he placed 3rd on the Thinkers50 list, a biannual ranking of the most influential global business thinkers, moving up from 6th (in 2011) and 32nd (in 2009)
  • Thinkers50 also named Playing to Win—the book I excerpted those passages from—the Best Book of 2012-13

 

 

Roger Martin is “terrified”

 

So back to my reply to Prof. Martin. As I already pointed out, his email begins as follows:

(Note: the text of his message is in bold-faced text; mine is plain-faced)

Dear Mr. Rys:

Actually, it’s “Dr.” if you want to get technical about it. Not “Mr.” But call me David – I’ve never been much for titles.

“My advice would be for you to stick to pharmaceutical science where you might know something useful. You certainly know nothing useful about management from what I can see – though I only read the first couple of paragraphs – which are nonsensical.”

Two things here, Professor Martin.

First, I’ve always found it to be a mistake to criticize something (especially so unequivocally) before having read it in its entirety, no matter how “nonsensical” it may at first appear. This is for all the obvious reasons, of course. Your questions or concerns may be addressed later on. Or you may have misinterpreted the author’s argument, etc. (More on that in a moment.)

Second, and with regards to your charge that my argument is “nonsensical,” I’d just mention that the substance of my post was peer-reviewed and then presented for critical review at 7th International Critical Management Studies (CMS) Conference in Naples, Italy on July 13, 2011. (This is something I noted at the end of my post, had you bothered to read that far.) And it was well-received, if I do say so myself. Of course, this doesn’t really prove anything, does it? So perhaps you’d like me to inform the conference organizers that you feel their review process is substandard in some way, or otherwise lacking..?

“Let’s imagine the following situation circa 1998. The biggest skin care market is face care and the biggest part of that market is face care creams sold for $20 – $500 in what is called the ‘prestige channel’…”

At this point, Prof. Martin goes into a somewhat detailed explanation as to why it was justified for P&G to price that skin care product at the price they did. Specifically, P&G charged $18.99 for a product that they could have sold for $12.99 and still turned a profit. For the purposes brevity, I’ve taken the liberty of summarizing Prof. Martin’s argument, but lest I be accused of giving it short shrift, or inserting my own bias, I have reprinted the full text of his email below for you to read for yourself, if you so desire.[4] Basically, he argues the following: If P&G had charged less for the product in question, “prestige customers” would not have been attracted to the brand, bought the product, and P&G would have lost out on a billion+ dollars in revenue. The “challenge,” he concludes, was getting “prestige customers” to believe that P&G’s skincare product is as good as anything offered by their more expensive competitors. He goes on to say:

“You can chose to be an idiot and ignore that challenge (of convincing prestige customers to buy the product) and start selling a much superior product to anything that has ever been sold in the mass channel for $12.99…

But all those prestige shoppers that you are attempting to help get a much better solution simply won’t show up and you won’t do a damn thing for them.  

That would be the idiot strategy – something you seem to support!”

(Sigh)

No – I don’t support such an “idiot” strategy, as you call it. And you would probably have realized that had you read on. But no worries. It seems that you were blinded by your frustration at being singled out for criticism, and thus unable read further. So allow me to reiterate and perhaps clarify.

For starters, let me just say that Mr. Lafley was justified in pricing his company’s products however he liked. As a firm believer in markets and the economic efficiencies they have to offer (provided the right conditions are met), I wouldn’t dream of arguing otherwise. Companies are free to charge whatever demand allows for their products and/or services. Period.

So, no – I am not the anti-capitalist that you seem to assume I am. (Nor the business neophyte, perhaps?) I do not think that P&G necessarily “cheated” its customers in any way, which I’m guessing is the charge you’re anxious to level at me? In the end, P&G’s customers felt they got what they paid for. Or at least enough of them felt that way for P&G to turn a profit. And this is not something P&G should be embarrassed by (nor something that you should feel the need to get defensive about).

However, if we can agree on this one point—as it seems we do—you cannot then also argue that P&G was being guided by the lofty principles contained in the company “statement of purpose.”

To charge customers more just to make them think your products are of superior “quality” on the one hand, and then on the other claim to be committed to providing products of “value” just doesn’t add up.

That IS contradiction to my mind – and that is the substance of my criticism.

But go on, you were saying…

“Instead, you choose to help the prestige customers gain the confidence to give your new product a try by pricing it just below the…prestige entry price of $20 – i.e. $18.99 – which drives trial by prestige customers…

And by helping those prestige customers discover a new brand, you help them trade down in price…and at worst sideways (for some of the $250+ brands) and mostly up in quality of the product…

And that is in contradiction to the principle of delivering products of quality and value in what way?”

Yes, yes – I get it (although I’m not sure you’re really “helping” your customers as much as you’d like to think). Nevertheless, I would agree that charging your high-end customers $18.99 does makes your product a “value” relative to the $20 (or $100) they might have had to pay for some other company’s skin care product. Furthermore, your low-end customers now might be able to purchase a much superior product, at a more affordable price relative to what they’d been paying in the past. And that too, is something that they are apt to “value.”

But your mistake lies in your failure to acknowledge (or perhaps recognize) that you’re playing a little fast and loose with the term value here. Specifically, there is a distinct, but perhaps subtle difference between a product that is “a value,” and one that customers “will value.”

Here’s another way to think about this:

When it comes to sneakers, for example, consumers may choose a brand (such as Nike, or whatever) because they like the idea of being associated with the athletes who endorse those shoes. This is something that they “value,” and are willing to pay a little (or a lot) more for. But those shoes aren’t really “a value” in the more absolute sense of the word, because you can probably find footwear of comparable quality and durability at a lower price. Again, two entirely different meanings of the word value – as well as two strategies for shoe manufacturers to adopt, neither of which is “right” or “wrong,” in my opinion. Just different.

To return to the scenario you and Mr. Lafley describe, clearly P&G sold their skin care product at a price many customers were willing to pay. Truly it was something they “valued” in that sense. But this alone does not prove—nor even suggest—that the product was “a good value,” or even “a value” in the more absolute sense of the word. After all, the product could have been priced lower, but wasn’t. And if I read it correctly, P&G’s mission statement describes being committed to producing products “of value,” not simply ones consumers “will value.”[5]

But that’s just my opinion, of course. Perhaps more illuminating would have been to ask P&G’s customers their thoughts (particularly the non-“prestige” customers)? Would they still have “valued” that skin care product as much had they known the price had been raised almost 50% just so it would be taken seriously by high-end shoppers? Or would they have preferred the lower price, and an effort on P&G’s part to educate customers (at both ends of the spectrum) of its true “value”..?

Again, I’m not criticizing P&G’s pricing decisions here. Charge your customers more, or charge them less. I honestly don’t care. But if you do choose to charge more than you might have otherwise to in order to deceive them—as you all but admit—don’t tout the company’s principled adherence to providing products of “quality” and “value.”

It’s contradiction – and frankly, it just doesn’t ring true.

“Stick to pharma, my friend. Your understanding of business is too weak to possibly attempt to create a coherent argument about something as simple as this. And this one isn’t a complex business issue.

I am terrified to see what you would do when faced with a complex business issue.”

Roger

“Terrified”? Well, okay Roger. I’ll make you a deal.

I’ll go back to pharma if you can correctly and coherently answer even one of my following questions.

You see, the whole reason I quit my job as chemist in the first place, and instead decided to write about (mis)managing is this: I’d become frustrated with how little my managers seemed to know about good management, and how to manage me. And that frustration turned to astonishment when I figured out that the so-called management “experts” (like yourself) really don’t seem to know what they’re talking about either.[6]

First, however, some advice. Indeed, since you’ve taken the liberty of offering me some unsolicited counsel, allow me to return the favor:

CEOs like Mr. Lafley should price their company’s products however they want. (Just as an aside, I’d be curious to learn what Lafley has to say about all of this, since I’ve not yet heard back from him.) But he should take a pass when it comes to writing a management advice book.

You see, Mr. Lafley may know a thing or two about how to run a business, but like most CEOs, he doesn’t seem to have a clue as to how to explain how to run one. Like virtually every other management advice book I’ve ever read, his (yours) is a text based upon a set of contradictory principles and paradoxical assertions. And this renders it useless to the practicing or aspiring manager – and the critical reader.

(To understand why yours and so many other management advice books fall victim to this same fatal flaw, you’re going to want to finish reading that original post, as well as its sequel.)

In this particular instance, I would only add the following: Why do CEOs continue to insist on the importance of crafting some BS, milk-toast, corporate mission statement, when they’re obviously not guided by it? Even if P&G were to have adhered to their “statement of purpose” more rigorously, does Lafley really believe that this is what distinguished P&G from its rivals? Don’t either of you realize that thousands of businesses—both successful and unsuccessful—trot out, or pay lip service to similar “visions”?

So stick to managing, Mr. Lafley. And leave the management advice business to someone else.

As for you, Roger…well, I’m not sure what to say. I’d argue that you should also stick to running companies, except that’s not really what you do, is it? As for your capacity to teach, that concerns me as well. I mean, if this is how you react to someone who pushes back on one of your ideas, I can’t help but wonder how you treat a student who dares to do the same in your classroom. Do you try to shout her down too? I hope not.

There is of course an irony in all of this. The rebuttal you offer, while off the mark since you seem to have misinterpreted the point of my post, is nevertheless thoughtful – and even thought-provoking. So I have to ask: why didn’t you include it in your book? I for one believe this to be just the sort of detailed discussion of a real life business predicament that most people (especially managers) are absolutely desperate for – and that is so obviously lacking in most management advice books.[7]

I mean, really – why hold back?

Okay – back to those questions I would have you answer, so I can finally return to chemistry:[8]

  1. If the person closest to a problem is usually best equipped to solve it, why is it that at most organizations the employees closest to those problems—namely, the frontline—are typically denied the authority to address them?
  2. If the companies we work for are supposed to be little meritocracies, as we’ve all been led to believe, why are office politics still so prevalent?
  3. Why are managers routinely expected to act as both “advisor” and “evaluator” with respect to their subordinates, given that these two roles are fundamentally incompatible with each other?
  4. If managers are in fact supposed to evaluate their subordinates performance, how do you explain the catch-22 this creates? After all, one of things that most effects any employee’s performance is how well he or she is being managed.
  5. Employees are usually expected to work as a team, but that can mean subordinating their own interests to those of the group, department, and/or company. And yet acting for the good of the “collective,” as it were, and against one’s own best self-interests doesn’t seem very capitalistic is it? So how do you explain that?

And please keep your answers brief and jargon-free…lest they come across as “nonsensical.”

Regards, David

 

To be continued?

 

Alright, that’s it. Care to weigh in on any of this? Submit your comments below.

And I’ll be sure to let you know if I hear back from Roger.

 

 

 

Endnotes

[1] This is entirely dependent on whether I can find an email address for them, or a Twitter account.

[2] From “Throw out that management advice book (Part 2): The Ten Commandments.”

[3] “How Successful Leaders Think” by Roger Martin. Harvard Business Review, June 2007. Online at: https://hbr.org/2007/06/how-successful-leaders-think. Retrieved Nov. 17, 2016.

[4] The full text of R. Martin’s email reads as follows:

Dear Mr. Rys: 

My advice would be for you to stick to pharmaceutical science where you might know something useful. You certainly know nothing useful about management from what I can see – though I only read the first couple of paragraphs – which are nonsensical.

Let’s imagine the following situation circa 1998. 

The biggest skin care market is face care and the biggest part of that market is face care creams sold for $20 – $500 in what is called the ‘prestige channel.’  These are ‘high street’ department stores and specialty stores that sell brands from counters staffed by beauticians who are employed by the skin care company, not the retailer (e.g. Clarins, La Prairie, Estee Lauder, etc.)  Women (95% of the market is women) like the quality of the products (better active ingredients, consistency, etc.), the fact that since the company owns the counter the full line is always in stock, the packaging is both lovely (so it looks appealing to them on their bathroom shelf which matters to them) and functional (better applicators/delivery systems, etc.) and the advice.  They don’t like two things – the beauticians tend to be pushy because they are commissioned; and it takes a special trip to the store – they aren’t in it on a regular basis. And they are ambivalent about one further thing: the pricing is high – typically the highest price they pay for any disposable personal care product – and while they know they have to pay for quality and quality is really important for the future of their faces, they wonder if they are paying too much. 

As P&G, you know that you have the technical capabilities to create a product that is as good or better than products being sold in the prestige channel at the $100+ price point and you want to deliver that value to consumers in a place in which it is easier to shop – I.e. the mass channel where they shop on a regular weekly basis for other household needs, plus they won’t be pressured by an aggressive sales person – and at a superior price to what they are used to paying. 

However, as P&G, you have a challenge.  Those prestige shoppers don’t believe that a brand sold in the mass channel can be of the quality that they think is the minimum necessary to take care of their face in an appropriate manner.  That is a big barrier 

You can chose to be an idiot and ignore that challenge and start selling a much superior product to anything that has ever been sold in the mass channel for $12.99 – at a price your research shows won’t attract any prestige channel buyers.  As a consequence, you will have a little business that encourages mass channel buyers who have been paying $3.99 for a mediocre product to pay $12.99 for a better product. 

But all those prestige shoppers that you are attempting to help get a much better solution simply won’t show up and you won’t do a damn thing for them.  

That would be the idiot strategy – something you seem to support!

Instead, you choose to help the prestige customers gain the confidence to give your new product a try by pricing it just below the Clinique prestige entry price of $20 – I.e. $18.99 – which drives trial by prestige customers.  It won’t guarantee continued usage by those customers – the product has to be a great quality/value combination for them.  

And by helping those prestige customers discover a new brand, you help them trade down in price, up in convenience and at worst sideways (for some of the $250+ brands) and mostly up in quality of the product.

That grows the business from $750 million to $2.5 billion – with most of the incremental $1.75 billion coming from customers who receive from P&G a product that is lower prince, more convenient and same or better quality than they previously had.

And that is in contradiction to the principle of delivering products of quality and value in what way?

Stick to pharma, my friend.  Your understanding of business is too weak to possibly attempt to create a coherent argument about something as simple as this.  And this one isn’t a complex business issue.  I am terrified to see what you would do when faced with a complex business issue.

Roger

[5] According to Lafley and Martin’s book, P&G’s full “statement of purpose at the time read as follows: “We will provide products and services of superior quality and value that improve the lives of the world’s consumers. As a result, consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper.”

[6] For more on this, please see my post: “Why that MBA might not be worth as much as you think”.

[7] I would also point out that you are not the only person to have struggled with the question of whether businesses should put profits before other, perhaps more “ethical” considerations. For instance, that late Peter Drucker grappled with this question as well (albeit unsuccessfully, in my estimation). For on this, please see my post: “Drucker’s Dilemma”.

[8] For those of you who follow my blog, you’ll recognize these questions from my inaugural post: “Why your boss probably sucks”.